reports
- Tolu Alamutu
Transcapitalbank in the news: Asking for forever
Transcapitalbank (TRACAP) announced a consent solicitation in respect of its September 2020 bond on 27 May. The lender is seeking to amend the terms of this short-dated security to allow for its treatment as Basel III Tier 1 capital. It currently qualifies as Basel III Tier 2 capital. Thus, if successful, this bond may become a PerpNC5 instrument with fully-discretionary interest payments. Further, under amended terms, the bond may be written down if the Common Equity Tier 1 (CET1) ratio fall...
- Tolu Alamutu
TBC Bank: Q1 results highlights – Still worth holding on to
Still worth holding on to: TBC Bank (TBCBGE) reported results for Q1 20 on May 20. With enough pages and slides of disclosures to rival some of the world’s longest novels (well, almost!) there was a lot for those in the analyst and investor community to sink their teeth into. The bank disclosed a net loss of GEL57mn. This compares to net income of GEL133mn in Q1 19. As at Bank of Georgia, the loss at TBC Bank reflects two key factors – a one-off charge of GEL31mn related to payment deferrals...
- Tolu Alamutu
Bank of Georgia: Q1 results highlights
Buy recommendations unchanged: Bank of Georgia (GEBGG) reported results for Q1 20 on 14 May. The net loss of almost GEL100mn equated to an annualised ROE of -18.6%. Bank of Georgia reported net income of GEL102mn in Q1 19. The loss in the first quarter of this year reflects two factors – a one-off charge of almost GEL39mn related to the 3-month deferral of interest and principal payments on some loans and GEL220mn in through-the-cycle (3-year) pandemic provisions. Operating income actually im....
- Tolu Alamutu
Ziraat: Q1 results highlights – All-round solid performance
All-round solid performance:Ziraat (TCZIRA) reported results for Q1 20 on 15 May. Net income of TRY2.5bn was about 50% higher than a year ago, primarily reflecting strong net interest income. This helped offset higher costs and provisions. A change in the method of accounting for the insurance business (due to the announced disposals) and in deferred tax amounts impacted some yoy comparisons, but performance in Q1 20 looks solid overall. The annualised ROE was 13.4% (Q1 19: 10.9%) on our calc...
- Tolu Alamutu
Halkbank: Q1 results highlights – Some improvements
Some improvements: Halkbank (HALKBK) reported results for Q1 20 on May 14. The issuer also hosted a conference call. We reiterate our Hold recommendations on Halkbank’s senior bonds. Bank-only net income of TRY825mn for Q1 came in below the Bloomberg consensus forecast of TRY850mn. However, the bottom line improved yoy and qoq. Consolidated net income of more than TRY1.1bn for Q1 20 compares to net income of just TRY173mn a year ago. The Q1 2020 ROE was 13.8% (Q1 2019: 2.3%). Net interest inc....
- Tolu Alamutu
Vakifbank: Q1 results highlights
Bank-only ROE exceeded 20%: Like Isbank, Vakifbank (VAKBN) also published Q1 results on May 8. We have Hold recommendations on Vakifbank’s USD-denominated senior and subordinated bonds. This commentary is largely based on bank-only figures. Net income of over TRY1.7bn more than doubled yoy and was up 34% qoq. Net income also beat consensus expectations. The annualised ROE was almost 21%, much higher than at Vakifbank’s major peers. Very strong net interest income drove the improvement in the...
- Tolu Alamutu
Isbank: Q1 20 review – Net income up yoy
Net income up yoy:Results season in Turkey continue on May 8, with solid figures from Isbank. Q1 20 consolidated net income of almost TRY1.5bn was down on a very strong Q4 19 result, but up 17% yoy. The annualised ROE was 9.1% on our calculations. Good core revenues drove the yoy improvement in the bottom line. Coverage ratios increased, liquidity metrics improved and capital ratios remained well above the required minimums, even before regulatory forbearance.Net interest income was very stro...
- Tolu Alamutu
TSKB: Q1 results highlights
A small miss:TSKB also reported Q1 20 results. Bank-only net income was just slightly below the Bloomberg consensus forecast. Consolidated net income of TRY152mn was down yoy, as improved non-interest income and good cost control were not enough to offset the impact of lower net interest income and higher provisions. The annualised ROE was 12% on our calculations (Q1 19: 16%). Fee income more than doubled yoy:Net interest income of TRY450mn was 9% lower than a year ago as there was a signific...
- Tolu Alamutu
Odeabank: Q1 results highlights
A better bottom line: Odeabank reported net income of TRY32mn for Q1 20. This was lower than in Q4 19, but much better than in the first quarter of 2019, when net income was just TRY4mn. Revenues fell but so did costs and provisions. The annualised ROE was 3.9% (Q1 19: 0.5%) on our calculations – clearly not an impressive figure, although the key takeaway will likely be that this lender remained profitable. Challenges clearly remain, given TRY weakness, continued pressure at Bank Audi (which ....
- Tolu Alamutu
Yapi Kredi: Q1 20 review – Better than Q4 19
Better than Q4:Q1 20 net income of TRY1.13bn at Yapi Kredi (YKBNK) was slightly ahead of the Bloomberg consensus forecast of TRY1.07bn. The annualised ROE was almost 11%. Higher provisions meant the lender’s net result was 9% lower than a year ago. However, this result was much better than in Q4 19 when YKBNK disclosed net income of less than TRY300mn. These results follow much-discussed ownership changes at the bank. UniCredit’s ownership has declined to 20% and there are still questions ab...
- Tolu Alamutu
Garanti BBVA: Q1 results highlights
Never mind the tech mishap:The Turkish banks’ Q1 results season continued on April 29 with solid results from Garanti BBVA (GARAN). A mishap at an "outsourced online operator" meant the Q&A session during the conference call was short, but we’ve chosen not to read too much into that. The lender gave quite a detailed presentation before the Q&A. We note that BBVA, the bank’s largest shareholder, reported its biggest-ever quarterly loss. This may well lead to even more questions about the pr...
- Tolu Alamutu
Akbank: Q1 review – Solid performance overall
Solid performance overall:As is now customary, Akbank (AKBNK) released results for the first quarter in late April, marking the start of the reporting season for major Turkish banks. Q1 bank-only net income of TRY1.31bn compared to the Bloomberg consensus forecast of TRY1.35bn. The bank added more provisions than a year ago, though this charge was lower than in the fourth quarter. The annualised ROE was just under 10%, which was down yoy and qoq. We still have a Buy on the subordinated bond a...
- Tolu Alamutu
Uzbekistan: Change is coming to the banking sector
A decree on banking system reform has been signed by President Shavkat Mirziyoyev. This covers the 2020-25 period. The banks are to adopt Basel and international financial reporting standards, improve customer service and lending mechanisms, and improve staff skills. Further, the share of banks that are not state-owned is to rise and the share of the private sector in total liabilities is to increase. Uzbekistan is also looking to attract at least three strategic foreign investors. These chan...
- Tolu Alamutu
CEEMEA Perps: Call me!
In 2019, Dubai Islamic Bank, Emirates NBD, Al Hilal Bank and Burgan Bank redeemed perpetual securities totalling US$3bn at the first call dates. 2020 has been quite different so far. Ahli United Bank and Bank Dhofar have both announced that their perpetual securities will not be called at the first call dates. This has cast doubt over other banks exercising call options on similar securities, and led to questions about how best to value perpetual securities. Assessing yields to perpetuity may...
- Tolu Alamutu
Turkish banks, government policies and regulatory forbearance
Wide-ranging policy and regulatory changes have been announced in Turkey, which seem set to impact almost every line of lenders’ income statements. As a result, banks’ financial statements may come with even more footnotes than usual. Ahead of the Q1 20 reporting season and the next meeting of the Central Bank of the Republic of Turkey (CBRT), we highlight just some of the key changes there have been in Turkey in the last two months. Sources for this are the CBRT, the banking regulator (BDDK...
- Tolu Alamutu
Garanti BBVA is buying back bonds
Garanti BBVA (GARAN) intends to purchase up to US$350mn of its senior bonds, as detailed in the table below. The buybacks will take place in the month following the announcement (dated 16 April) through "one or more open-market transactions". Table 1: Garanti - Key bond buyback detailsBond namePurchase up to (US$mn)Amount out (US$mn)GARAN 6.25% 2021 100 500 GARAN 5.25% 2022 150 750 GARAN 5.875% 2023 100 500 Source: Company announcement, Bloomberg In each case, the maximum purchase amounts equ...
- Tolu Alamutu
Georgian banks: Battening down the hatches
We are keeping our Buy recommendations on Bank of Georgia’s (GEBGG) senior and subordinated securities for now. We are also assigning Hold recommendations to the TBC Bank (TBCBGE) senior and subordinated bonds. Bank of Georgia has a much longer track record in the Eurobond market. Capital ratios at TBC Bank were better than at its largest peer at end-19. However, the FY 19 ROE at Bank of Georgia exceeded TBC Bank’s, the NPL ratio was lower and Bank of Georgia’s liquidity coverage ratio (LC...
- Tolu Alamutu
Tinkoff Bank: Farewell (for now) to the founder
Select Russian bank perps: Mid YTP (%) [-eu-west-1.amazonaws.com/exotix-content-uploads/xuDoNSctABjdxzVG1gddt3wb5SgHwUeI1MP2tylQ.png] Source: Bloomberg. Indicative levels. Oleg Tinkov, founder of Tinkoff Bank/TCS Group (AKBHC) has stepped down as Chairman of the Bank's board. He has been replaced by Stanislav Bliznyuk, who was previously head of business development. This decision comes after Tinkov disclosed that, sadly, he has been diagnosed with acute leukaemia. The decision als...
- Tolu Alamutu
Nigeria banks: CBN update may have implications for asset quality
The Governor of the Central Bank of Nigeria (CBN) held a press briefing on 16 March. Six policy measures were announced to address the economic impact of the Covid-19 pandemic: 1. A 1-year extension of the moratorium on principal payments on certain intervention loans. 2. Reduction of interest rates on CBN intervention facilities to 5% from 9% for one year. 3. Creation of a NGN50bn credit facility for households and SMEs. The CBN mentions hoteliers, airline service providers and health car...
- Tolu Alamutu
Privatbank: Another step forward for senior bondholders
Holders of Privatbank senior bonds are one step closer to repayment. On March 16, the London High Court determined that the senior bondholder trustee would not incur additional liabilities by making payments to some (but not all) holders of the PRBANK 10.25% and PRBANK 10.875% securities. Hearings in the London High Court took place in late February, but the presiding judge decided to withhold judgement at that time. As a reminder, the senior bondholder trustee was seeking direction regarding...
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